Thursday, May 31, 2007

Making game sales a felony is the latest idea out of a New York legislature so bent on wasting time that they've authored dozens of anti-video game bills in the last month. The Constitutional issues have been brought up in other reports, but New York GameStop employees (among others) should really be paying attention. Why?

While the law does give some leeway for the sentencing court, it theoretically allows a judge to put someone away for life for selling a copy of, say, Gears of War to a 16 year old who looks 18. Yes, selling a game could come with a life sentence under the new law.

As I have stated before, this is just poor governance. However, to go as far as to make it a felony borders on lunacy. It would only further contribute to prison overcrowding, among other things. Moreover, providing alcohol or tobacco to a minor is generally a misdemeanor and a fine in most states, and there is no penalty for selling a copy of Saw or Hostel to a minor. In any event, the game developer and game retailer attorneys will likely be busy in New York in the coming months considering the determination the New York legislature is showing on this non-issue.

[Update: A reader apprised me of a very recent federal district court decision that may, for the time being, put the New York 3 Strikes rule on hold. However, that doesn't mean this hypothetical is any less relevant. (And after all, it is merely a hypothetical as the game regulation bill hasn't yet passed.)1. The part of the law the district court has issue with could be removed from or modified in the law rather easily by the legislature or an activist judiciary. This would make all twice convicted felony offenders "persistent felony offenders" and eligible for the heightened third strike penalty (rather than allowing the judicial discretion).2. The district court could be overturned on appeal.3. The New York legislature could simply pass a new 3 strikes rule modeled on California's rule, which has already been upheld by the US Supreme Court.

So, while the issue may be (hypothetically) muted for the time being, it is by no means dead.]

Wednesday, May 30, 2007

In my previous article, I outlined the basics of the World of Warcraft and Second Life licensing models, along with a business plan that could be applied in the way Sony has implemented Station Exchange for EverQuest II. This article will take a look at the Sony model and explain an alternative model .

Sony Station Exchange

The Sony model is a basic re-sale of license model. Looking at the Station Exchange Service Agreement (which is incorporated in whole in the EverQuest II EULA), (Emphasis added)

You agree that you do not and will not own anything. You agree that, as between you and SOE, SOE owns all copyrights, trademarks and other intellectual property rights in game characters, items and coin (characters, items and coin are, collectively, "Virtual Goods"). SOE hereby grants you the limited right to transfer and receive the licensed right to use Virtual Goods, in return for real money, solely through the Station Exchange and solely in accordance with this Agreement. AS USED IN THIS EXCHANGE AGREEMENT, THE GAME AND ON THE STATION EXCHANGE SITE, TO "SELL" MEANS "TO TRANSFER TO ANOTHER PERSON THE LICENSED RIGHT TO USE VIRTUAL GOODS IN ACCORDANCE WITH THIS EXCHANGE AGREEMENT;" TO "BUY" MEANS "TO RECEIVE FROM ANOTHER PERSON THE LICENSED RIGHT TO USE VIRTUAL GOODS IN ACCORDANCE WITH THIS EXCHANGE AGREEMENT." Accordingly, regardless of SOE's shorthand use of the words "buy" and "sell," whether in this Exchange Agreement, any game, any message board, on the Station Exchange site or elsewhere, SOE has not granted, is not granting and will not grant you ownership of any Virtual Goods.

"Licensed use" and "licensed right," among other things, means that your game play, acquisition and use of Virtual Goods -- and the transactions you engage in through Station Exchange – are all governed by the provisions of this Exchange Agreement and the Underlying License Agreement and Rules. You agree, therefore, that if you violate any of the provisions of this Exchange Agreement, or any of the provisions of the Underlying License Agreement and Rules, SOE can take any action which it believes is appropriate, including but not limited to terminating your participation in Station Exchange, deleting Virtual Goods associated with any of your accounts, and/or suspending or terminating your accounts entirely.

In short, you still own nothing, but you are allowed to transfer your license in the item for money. You are more or less an intellectual property broker with an odd way of acquiring what you're "selling."

Station Exchange and Income Tax

The only other peculiarity of the Sony system is income tax. If you are selling on Station Exchange, this should be the part you pay attention to. As eBayers have discovered, money from auctions is income, and a PayPal account is a real bank account. The difficulty is determining a starting value for the items being sold. I would contend that the correct base value on all items is $0, and as such all money made from them is reportable, taxable income to the IRS. Under this model, you would only have taxable income if and when you sold an item, but selling any item (or character) would generate taxable income, and taxable income must be reported to the IRS.

Alternatives

Solving the Tax Problem

The whole taxable income problem has two solutions a developer could implement, one which seems more likely than the other. The unlikely solution would be automatic withholding on transactions. This, however, puts quite a burden on the developer, not to mention potential liability for tax fraud. The alternative would be to generate quarterly and annual sales reports for each user. This would help the user file correctly without unduly entangling the developer with the IRS.

Alternative License Structuring

The alternative license structure is one I mentioned in my last article. Basically, rather than allowing the player to re-sell licenses, it is to designate the items, characters, etc. as representations of player effort. The player is then re-selling their "time" and "effort" rather than the license to the object. It operates almost like contract labor. Rather than buying the item, I'm retroactively paying you for the time it took you to get the item, as if I hired you to find it to begin with. The only difficulty would be structuring around the general contract principle that you cannot contract for past performance. If this could be solved, then an alternative to the license resale model can exist.

Conclusion

There's an old saying about there being more than one way to skin a cat. While I'm not a fan of animal cruelty, I do agree that there are usually multiple solutions to any given problem. Here, there may even be more than the two I've suggested, these just happen to be the two that most readily came to my mind. As the MMO genre moves more to this economy, more models are always likely to emerge.

Out in the grand expanses of the world wide web, there are really two competing models of IP licensing in the MMO world. The first is followed by the vast majority of games, including the ever-popular World of Warcraft. The other is a more recent development employed by Second Life. After explaining these two in brief, I would like to propose an alternative "middle ground" which could significantly alter the MMO landscape. This IP model is accompanied by a brief discussion of a relevant business model which is closely related.

The World of Warcraft Model

I term this the "World of Warcraft" model, but it historically begins more in the Ultima Online age. The model is basically as follows: The developer provides all content, which is licensed to the user. The user has, basically, no rights under this model. In short, no matter what it took for you to get that Blackfury, the item is merely "on loan" to you from the developer. You can never truly own it. This model is the most popular because it protects the assets of the developer, specifically all the intellectual property that went into the game you're playing. After years of development, most developers don't want to chance anyone walking away with even part of their intellectual property.

The Second Life Model

The Second Life model is much different. In short, the developer provides the basics of the world, but it is up to the user to fill in the rest. The upshot to this model is the user owns their IP. The downside, on the other hand, is that to get a truly enveloping storyline like WoW, it takes a user developing one, not to mention the play mechanics to accompany it. For those seeking profit, this model is ideal. For those looking for an adventure, elsewhere would probably be a better choice.

An Alternative?

So, where does that leave the player? If they want an adventure, the WoW model is the choice, but they never truly have any interest in what they've accomplished. On the flip side, the SL model gives unlimited ownership, but no pre-written storyline to speak of. The alternative rests in an argument eBayers made for years while selling vitrual goods they did not truly own.

The alternative boils down to drafting a license in such a manner that the player does not own the item he has acquired, rather his effort to acquire it salable. In terms of drafting, there are two likely ways to create this system:1. Establish a license that acknowledges player effort and allows the sale of player "effort" vis a vis the sale of items.2. Draft the license in such a way that each individual game property is granted based on a license that is transferable only between players.

Of course, to continue to exert proper intellectual property controls over these licenses, the developer would have to implement something else. Specifically, an integrated real money auction system. Let's be perfectly honest: People are willing to pay money for characters and items in MMORPGs. Moreover, while the eBay ban has slowed the market, it has by nomeansshutitdown. So, what is a developer to do? Police the market at a high cost?

The alternative here, of course, is to create your own auction. The business model is simple enough: Allow players to list, buy and sell items and characters. Provide for integrated exchange tools in the game. Use an online payment system to automate the process. Put in feedback. Then charge a transaction fee and you're making an even bigger profit off your MMO monster than your were before. While the coding may be difficult, the reward could be enormous. And such a system would not further entangle your development company with the IRS, in case that was a concern. (Players would be on their own to report MMO profits to Uncle Sam, unless a regulatory change moves all MMO income from ordinary income to gambling winnings.)

Conclusion

In short, it is not beyond the realm of possibility for a developer to legitimize real money trades in games where they wish to retain the majority of the rights to the IP. It would take a concerted effort and more work than the creation of a typical MMO, but the potential profit from such a system seems limitless. Of course, a new, carefully drafted license as noted above would be an absolute must to be sure that the developer's rights are protected.

[Update: It would seem Joystiq is reading my mind today. In fact, Sony's StationExchange operates on a similar model to what I've suggested here. Check back in the near future for a more in-depth analysis of the Sony model.]

Wednesday, May 23, 2007

We prefer a meaningless collective guilt to a meaningful individual responsibility. ~Thomas Szasz

The latest attempt to regulate the game industry by New York has gone widely reported, but is just the latest in the long trend of poor responses to over-dramatized concerns in the wake of a complete absence of parental responsibility. I feel compelled to once again step outside the typical realm of my blog's discourse to address this issue. Fortunately, the theory of governance and the basics of legislation are an area I can claim some expertise as my Bachelor of Arts is in Government. (While other schools may refer to it as Political Science, my alma mater still refers to it as Government.)

It seems that certain members of the public who crave attention generally find something to demonize for publicity. In our generation, the easy target is the video game. While the real effect of gaming on youth is still hotly debated, there is at least areasonableamountofevidence showing the claims of the extremists are overbroad, reactionary and absurd (where they even have grounding in fact, unlike some claims). However, the very nature of our society seems to dictate that if a group cries loud enough, anything can be banned. In fact, the results are usually less than satisfactory.

Other forms of media offer the same escapism as the game industry. And, much like other forms of media, have been tied to deplorable acts. However, media that is one the edge of acceptability has often been demonized. To quote Miyamoto, "Video games bad for you? (laughs) That's what they said about rock and roll."

Why do politicians gravitate to these non-issues? The simple answer is to placate the reactionary, uneducated voter. Moreover, it makes these government officials appear to be protecting the public when they are in fact allowing parents to scapegoat an easy target. No parent wants to admit they are failing their child, but to be perfectly honest, most of them are not paying nearly enough attention to their child's media consumption. In fact, if they took the time to pick up the box and look at the rating, even that would be a substantial step in the right direction. This is not a complex issue, and it is one that has worked in both the movie and television industry. Game ratings are no different.

Rather than wasting an absurd amount of taxpayer money re-regulating a self-regulated industry and litigating issues that have been previously struck down, the government should be trying to help the public become educated and learn to take personal responsibility for their actions. The courts have done their part in striking down these unconstitutional restrictions on speech, but free speech has never been the reason I see these regulations as so absurd. To me, reactionary politics is a perpetual waste of time and money that could be avoided with reasonable discourse and personal responsibility.

Of course, if the video game lobby was not eons behind certain other industries, more reasonable solutions such as these may already be on the table. I would have thought the history of the ESRB would have been enough impetus to increase the lobbying presence, but it took the upheaval brought on by recent events to get the ball rolling, so to speak.

My great hope is that excessive government entanglement will be avoided, lest we repeat history. While I don't believe ten year olds should be able to freely access M-Rated games, I do believe parents need to take more responsibility for their children. We have survived the printed word, the radio, and the motion picture without excessive government action to "protect" us from the media. We will survive the video game just the same.

Monday, May 21, 2007

The Halo 3 Beta is well under way by now. My stats are here. I was one of the lucky players who got into the Bungie Friends and Family phase of the beta before the larger public beta began, and the contrast between those few days and the present state of beta play has been surprising. In fact, I'm once again stepping outside my typical legal commentary to make this post as more of a business model commentary.

The overarching problem with large scale online systems, be they online PC gaming, Xbox Live, Battle.net, Nintendo WiFi, or any others, is the interaction between the players. By that I mean a combination of circumstances:1. Player Skill2. Player Interaction In-Game3. Player Interaction Out of Game4. Player Language

Each of these elements can factor into the matchmaking scenario, and while great improvement has been made on many levels, there is still a vast realm of possible improvement in the business model.

Take the Halo 3 Beta as an example. There was a short Friends and Family (F&F) beta that took place before the larger pool of invitees entered the fray. Specifically, these players had to be invited by Bungie directly, or have the proper connections to be invited (for example, the staff at Rooster Teeth made some invitations available to site members if they offered to "help test something" during the right time period). And as a result, the Halo 3 Beta F&F play was some of the most enjoyable online gaming I've experienced in any game. And that goes back as far into online gaming as I can remember. I played Diablo on Battle.net when it came out, I played Ultima Online back in its prime, I played CounterStrike online in its early days, and I (of course) played some Halo 2 online when it came out. None of them (or any other example I could give) provided the kind of experience the Halo 3 F&F did. It was the ideal mix of the four elements:

1. Player SkillEveryone was good. I will readily admit I was not anywhere near the top of the players in the F&F, although I will also admit this was the first FPS I had picked up since PREY last summer. However, the skill level wasn't too skewed in the other direction either. This does speak well of Bungie's new matchmaking formula, but it wasn't the skill that really made an impact on me, it was the other three elements.

2. Player Interaction In-GamePoliteness. Teamwork. Two words that most people do not expect with online gaming, or at least not where a real sense of competition is retained. However, the F&F beta proved this was not only possible, but can occur in excess of 90% of the time with the right mix of players without sacrificing any element of the competition.

3. Player Interaction Out of GameThe general feeling in the game was mirrored in the dead time between matches. Every round ended with a genuine (or at least genuine sounding) "Good Game." If someone asked a question about a gametype they had not seen, they generally got a good answer. And of course, when there was some banter, it was always good natured.

4. Player LanguageThis is not about the native language of the player. Rather, it has to do with the profanity and terminology of the player. While I've grown to expect a certain level of internet slang and profanity online, the F&F was quite the opposite. People spoke in real English without using profanity every other word. It was really quite remarkable.

Of course, the F&F period has ended and the larger beta is going on right now. I've logged a few more hours in all of the game types (rumble pit, team slayer, team skirmish). The Beta is now populated by far more of the "typical" online gamers. Bad sportsmanship (in victory or defeat), extreme profanity, and general unpleasantness. In fact, I don't even typically plug my headset in anymore.

Is there a solution to this? There must be people who genuinely want to play with other polite players. One person has suggested that Bungie open up a special playlist to F&F participants only. While this may be a solution, I think a broader solution might better serve the gaming community. That is, some sort of monitored division of the gamers at large. Microsoft's different Xbox Live groups (professional, recreation, underground) initially looked like this kind of division, except they don't seem to actually do anything. And player reviews can only subsequently avoid players.

A potential solution might work like this. Take an initial group fitting the criteria, say the F&F Halo 3 Beta group. Allow others to play into the group, and have user reviews remove those who don't conform to the code of conduct set up for the group's operation. While it may sound exclusive, it could allow gamers who enjoy a certain level of politeness to band together and not be forced to deal with the general population. Participation would be voluntary, and players could even have the option of playing the general public rather than the group if they so choose. Think of it as a hybrid between the unrestricted pool of Xbox Live and the overly restrictive DS/Wii friend code system. Moreover, it could be expanded to include preferences on other factors, such as native language, age group, or locality.

Is this possible? I'm certain it is, but it will take a company with the initiative to implement it to make it a reality. Generally, I think most gamers will appreciate it. I know those who prefer the more polite play of the F&F beta would.

Just as a side note if anyone at Bungie happens to read this, Team Slayer shouldn't be included in the Team Skirmish gametypes. There's an option to only play Team Slayer, so if I've picked Team Skirmish, I expect Capture the Flag or King of the Hill or Oddball or VIP. But that may just be my opinion.

Friday, May 18, 2007

Illinois is poised to pass a bill that deals with the definition of gambling in that state, and more to the point, removes the classification of "gambling" from particular activities. The relevant portion of the bill states:

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(12) Offers of prizes, awards, or compensation to the

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actual contestants in any bona fide contest between 2 or

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more individuals participating in (1) an electronic video

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game simulating a contest requiring skill, experience,

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dexterity, and precision in which the element of chance

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does not predominate or (2) an electronic video game

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requiring speed and accuracy of response to factual

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questions in which the element of chance does not

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predominate; but not including card games and simulated

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card games and not including any gambling game or activity

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of the type conducted under the Bingo Licensing Act, the

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Illinois Lottery Law, the Raffles Act, the Charitable Games

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Act, the Illinois Pull Tabs and Jar Games Act, or the

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Riverboat Gambling Act.

Put simply, they are legalizing certain payouts to a specific new classification of players. The Joystiq article seems to imply that this will legalize all betting as related to video games, but this is not the case. Let's take a look at the Illinois statute.

The new language is an exception to the general rule of what is considered gambling in Illinois. These designations are under subsection (a) of the bill, but include the typical wagering aspects as well as organizing wagering type activities. This exemption is narrowly drawn to allow for payouts in specific circumstances which would generally fall in the organizing section of the restricted activities.

This bill has a few key points in the exemption:1) Offers prizes, awards, or compensation2) to actual contestants3) in a bona fide contest between 2 or more individuals4) the specific game types allowed

Taking these issues one at a time, the first speaks to a payout exclusively. It does not exempt wagering on the activity. The second requires that the people being paid are contestants. The third requires it be a bona fide contest. And the final describes, generally, video games that involve skill.

Applying this analysis, I will outline what I believe falls on each side of the line.

First, the legal activities are fairly discreet. I imagine it is designed to mostly include events like QuakeCon or Major League Gaming or pay-to-play events. Specifically, a large, organized tournament where the winner takes home the prize, often paid by the entry fee or donations or a combination thereof. On a smaller scale, private tournaments could also qualify, assuming the games are those included in the bill.

This does beg the question, what is a game that involves skill? First person shooters, rhythm games, and even MMORPGs all require skill. The only games which would not qualify are games that are predominantly based on chance, like electronic blackjack or video poker.

On the other hand, the illegal activities are still left to be fairly broad. The restriction that players be actual contestants eliminates any possibility for outsiders to bet on video games. So, I couldn't go put $5 on the outcome of the next big Halo tournament. And the bona fide contest requirement will likely pose a difficulty for anyone who wants to bet on the next, spontaneous round of a game being played at a LAN party.

So, the Illinois bill would essentially legitimize large scale pay-to-play tournaments. If this bill passes, it is good news for anyone planning such an event in Illinois. The bill has yet to be signed by the governor, though, so don't start planning your big pay to play tournament in Chicago just yet.

Tuesday, May 15, 2007

Much like Columbine, the Virginia Tech Massacre has already seen its fair share of ties to the game industry in the media (even if they are completely fabricated). And, like Columbine, a small developer has decided to attempt to capitalize on the tragedy with a flash game (in this case, a very poorly constructed flash game). The reaction is generally one of disgust, and with good cause. Pouring salt in the wounds of so many families is not a way to make fast friends, nor is demanding blood money to remove the game from your website. However, I don't wish to tackle this issue on the moral level or the ethical level as other sites have. I would like to take this on from the legal standpoint, even if it does serve as another departure from my typical transactional law commentary.

Before I begin, I want to once again re-iterate that this is not advice to anyone who may be in a position to bring suit, and that anyone in that position needs to seek counsel to proceed.

There are two particular legal actions that come to mind that may convince, or force, the author of this flash game to abandon his creation.

Infliction of Emotional Distress

There are two causes of action for the "infliction of emotional distress" that exist in many (but not all) states as common law actions. These are intentional and negligent infliction of emotional distress. The former is more widely accepted than the latter, and the latter would not apply in this situation. Intentional infliction, however, may be applicable.

Intentional infliction of emotional distress has 4 primary elements:1. An intentional or wreckless act2. Extreme or Outrageous conduct3. Causation4. Actual Emotional DistressTaking them one by one, creating and releasing this game on the internet was clearly intentional, and creating a game that makes a real life (not fictional) brutal mass murderer a "hero" at the expense of the victims of the real crime is likely outrageous. If any of the victims' family members were to see the game and suffer actual harm, such as a heart attack or prolonged headaches, as a result of seeing the game, then there could be a case made for intentional infliction of emotional distress.

Right of Publicity

I must admit, I could not bring myself to play through all of that game. It was just such a colossal waste of time and so poorly designed. There are two possible right of publicity claims that I can think of, however, I am not sure how much the second may apply because I'm not sure of the game's content. Both claims, however, face some serious hurdles.

First, Cho's family might have a claim. The difficulty is that many jurisdictions will not protect these rights after death. Moreover, there are many arguments that could be made about the content and its news or artistic value.

Second, if any victim is correctly named in the game, that family would have a more compelling case for protecting the right of publicity, but still with the same post-death protection hurdle to overcome.

Under either case, the general elements of misappropriation are present. The author has taken these people's names, and is profiting (or at least trying to profit) from their use. While it is not the typical case (i.e. false celebrity endorsement), it does seem to satisfy the elements.

Conclusion

While I am typically a proponent of free speech, insulting the dead is one of the areas where I believe a little common decency goes a long way. If this game were not simply awful and presented in such a manner, or if the author had not turned the situation into what amounts to a ransom note for human decency, then many people would likely not have even paid attention. But, rather than take one of these approaches, the author abandoned most any claim of class or artistic merit in favor of pure shock value. While I'm not sure if any of these suits would bring any remedy, they are at least something to consider when there aren't really any alternatives (unless you consider paying the author to take down the material a viable remedy).

As a side note, I can only hope that the actions of rogue creators such as this are not used against the legitimate industry by opportunistic politicians and talking heads once again. The analysis that regulating games will somehow affect these basement developers is just completely flawed. It is analogous to thinking that a regulation of the content of print media (books, magazines, newspapers) will somehow regulate the content of online message boards, text messages, and notes left on the refrigerator at home. It only serves to demonstrate a complete lack of understanding of the media and the industry.

Friday, May 11, 2007

Ordinarily I would have posted a new article today, to leave the blog-o-sphere with something to ponder over the weekend. However, something came up.

If you would like to hear more about the Halo 3 beta, I suggest you keep an eye on one of the gaming blogs (in the column to the right). I hope those privileged enough to attend the big event enjoy themselves.

The common denominator between these articles is their approach to the analysis of so-called "Virtual Rape." (Although some draw lines between virtual sexual harassment, stalking, and rape through so-called "voodoo dolls," all are dealing with the same over-arching concept.) I think many of them have missed the point. So, rather than start with what occurs in Second Life, let's start with what occurs in First Life, i.e. the real world.

There are really two kinds of rape: Traditional forced intercourse and Statutory rape. Both could theoretically occur in a virtual world, so each should be looked at individually.

Statutory Rape

Statutory Rape is "a sexual act that is considered rape by the law regardless of whether it was coercive or consensual." In most jurisdictions, this would be like a 30 year old having sex with a 13 year old. The law protects the child because consent is not necessarily valid and because there is a moral stance against the action.

Can this occur in Second Life? Well, it can. Teens are supposed to be segregated to the teen grid, but either an adult posing as a teen or vice versa could theoretically be on the wrong grid. If said impostor has cybersex with someone of a radically different age, it could in fact be statutory rape.

Or is it? No sex is actually occurring. While the pedophile in question may be slapped with all sorts of indecency charges, I have yet to see any prosecution in the US for statutory rape based entirely on cybersex, and if such a prosecution had occurred, I'm sure certain websites would have posted it by now.

Traditional Forced Intercourse

Traditional rape is generally defined as forced intercourse without consent. Under the voodoo doll scenario posted on Virtually Blind, a rape is possible, in that forced intercourse occurs. So, people in Second Life can get raped.

Or can they? Typically, a player has to install or activate some element of code to enable the rape. By this simple action, are they not consenting? And if they are volunteering, then the act is not rape. Even if the code is maliciously installed, like a virus, Second Life rape and real life rape have one major difference: In Second Life, you can always pull the plug. Turn off your computer. Disconnect from the server. Walk away from the monitor. There are many, many points of egress that a real rape victim is not afforded.

Conclusion

In short, Second Life rape isn't really rape at all. It's not a nice thing to do (assuming it's the effect of a virus and not voluntary as opposed to people who buy into it), but it's certainly not a crime. However, that is not to say that some real crimes may not come from stalking that originates in Second Life, or leaks of personal information, but until it crosses the boundary to have a real, tangible criminal effect in the real world, like stalking or identity theft or burglary, it's not anything more than a pseudo-crime. As such, I would hope the police find something better to do than investigate rape in Second Life, such as investigate rapes and murders in real life.

Monday, May 7, 2007

While the idea of playing Final Fantasy VII in Second Life sound fun, my infringement sense is tingling. The original article states: "As far as Square's sponsorship of the whole thing, we know for sure that they aren't directly involved. Among the GMs I spoke with, almost all of them were 100% convinced that Square had given some kind of blessing to the proceedings, but nobody was positive who exactly got that blessing." And if I were involved with this, "not positive" would mean "bad idea."

What the people have created is a derivative work, of sorts. I only say "of sorts" because no one has ever tested this medium (to my knowledge) in court. In short, among the bundle of rights a copyright owner has is the right to create derivative works. Derivative works are things like re-makes and sequels that rely on elements of the original work. As a relevant example, Dirge of Cerberus and Advent Children are both derivative works of Final Fantasy VII. The rumored remake (based on the E3 2005 Tech Demo) would also be a derivative work.

And so would Midgar in Second Life.

Second Life Midgar relies on significant (and substantial) elements of Final Fantasy VII. It is, without a doubt, a derivative work. Which means that either the creators need a license to create the work, or they are likely committing copyright infringement, which SquareEnix could bring suit over. The fact that they are profiting from the work (or at a minimum collecting revenue, even if it is a wash or a loss) only makes the infringement more troublesome.

Maybe SquareEnix will continue to look the other way. Maybe one of the GMs secretly works for the RPGiant. In any case, if I were taking profit from this game, I would want a license in writing sooner rather than later.

Friday, May 4, 2007

I have dealt with a wide variety of consumer protection issues in my career, primarily ones dealing with franchising. Consumer protection, in general, is a double edged sword: on the one hand, naive consumers should be protected from frauds; on the other, government regulations do not always work as planned and always inevitably lag behind real world progress. With the evolution rate involved with online commodities and virtual goods, the gap between the world the regulations are designed for and the present reality will always be vast. I, however, will grant that some sort of consumer protection needs to exist. I would propose, rather than allowing government regulators to handle the situation, the creation of a multi-national regulatory body to handle issues in virtual goods. The body would basically parallel a licensing board (much like doctors and lawyers deal with) that can adapt its rules at a much faster pace to conform to the reality of the business, but at the same time have the ability to censure members.

The first step would be the creation of the body with some recognition by governments. The only real restriction that the governments need to authorize is that in order to be a virtual commodity supplier and/or broker, you must be licensed by the board. This would mean that games that wish to have real world currency transactions, such as Second Life, must be registered. Additionally, if someone wanted to act as an independent virtual goods broker (a profession which will undoubtedly appear in the not too distant future), they must be registered as well. The exact details of license requirements would have to be detailed by the board. More than likely, games without real-world transactions (i.e. Word of Warcraft) would be exempt from registration and licensing.

Ultimately, then, the board has the responsibility to field complaints issued about their members. Upon review, the board would be free to fine members or suspend licenses, just like bar associations and medical boards. Assuming the policing is adequate, the consumer protection desired would exist without bogging the entire system down in government action. Moreover, the board would be able to address new technological issues as they emerge, whereas a government would be horribly behind and lack the experts to completely understand the problem (not to mention the partisan political element and typical inter-nation bickering).

Thursday, May 3, 2007

Let’s Talk About Machinima is a 3 part series.The first was Machinima from the perspective of the Machinimist.The second tackled Machinima from the point of view of the game developer. Finally, the third is a bit of a forward thinking proposal on Machinima.

Part 3

“So, Where is Machinima Going?”

While I make no claim to being the Nostradamus of the machinima world, I do believe I have a model that could simplify machinima for both the machinimist and the developer, while protecting everyone’s rights and hopefully letting some start-ups make money without having to take out a second mortgage (or sell their game collections on eBay).Of course, what I’m proposing will likely take the backing of a major machinima operation like Rooster Teeth or Machinima.com as well as the cooperation of a few game studios.Think of the proposal as taking the next step past what Machinima.com has built to date.

A Modest Machinima Proposal

To boil this down to its basic level:YouTube for Machinima, but with a model by which the end user can actually make money.The site, for the sake of this proposal let’s call it NewMachinima.com, is the key to the entire proposal.It allows all users to upload video content.This content will be limited to machinima for which the site has acquired a specialized license.That content can then be classified by the uploading user as “free,” “donation,” or “subscription.”Free content is just that, free.Donation content allows people to choose to donate to the machnimist, but the content is still free.Subscription content is limited to paying subscribers.On the latter two, when payment is made, 70% goes directly to the uploading user.The remaining 30% is divided, with 15% going to the game company and 15% retained by the site.Of course, these numbers are variable, depending on actual application.

Why This Idea Works:

1. Developers Keep Their Rights

The most important thing from a developer’s standpoint is protecting their rights.Under this plan, the developer has issued a license, one time, to the site.They have avoided the fees associated with repeated licensing, but have maintained a license for the end user.They only have to police other video sites (like YouTube and Google Video) for possible infringers.

2. Machinimists Can More Easily Publish Works

YouTube already makes putting video on the internet easy, and that is not the main purpose of this site.The main purpose is to take some burden off of the machinimist in procuring a license to create their art. Moreover, with the engine appropriately licensed already, the machinimst will have little trouble retaining the rights to their portion of the work or registering a copyright.

3. Everyone Profits

The key problem with YouTube is they make money off your hard work.The key problem with posting your machinima independently without securing a license and charging for it is that you’re making money and the developer is both losing money and rights.This concept solves both of those issues.The machinimist can make money from his or her work.The developer makes some money for providing the license.And, of course, the website makes money so it can continue to provide the service (although ads may be a necessary evil, at least for the free videos).

So, when can we start?

The business model is right here, and it is relatively simple.In fact, I would be happy to work with anyone on a project like this.The difficulties, however, are not insignificant.

The group creating this site needs startup money.

The group also needs some industry connections to at least procure those initial licenses.

The legal work involved is fairly complex, so a competent attorney would be needed to coordinate the licensing.

Those are just the three main issues, as I’m sure a few dozen smaller issues will likely pop up in the interim while bringing this idea off the ground.However, properly executed, this could be the next step in the machinima evolution, bringing even more machinima content to the masses.And from here, who knows what the future could bring, be it Xbox Marketplace integration or something even newer and more revolutionary.

Editor in Chief

Mark Methenitis is an attorney in Dallas Texas. Mark received his Juris Doctorate and his Master of Business Administration from Texas Tech University and his Bachelor of Arts from The University of Texas.

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